Should Value Investors Buy Encompass Health (EHC) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Encompass Health (EHC). EHC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 17.83. This compares to its industry's average Forward P/E of 17.86. EHC's Forward P/E has been as high as 21.45 and as low as 14.90, with a median of 18.89, all within the past year.
Investors will also notice that EHC has a PEG ratio of 1.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EHC's PEG compares to its industry's average PEG of 2.16. Over the last 12 months, EHC's PEG has been as high as 2.93 and as low as 1.16, with a median of 1.66.
Finally, we should also recognize that EHC has a P/CF ratio of 11.71. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 23.34. Over the past 52 weeks, EHC's P/CF has been as high as 12.95 and as low as 8.92, with a median of 11.80.
Another great Medical - Outpatient and Home Healthcare stock you could consider is The Pennant Group (PNTG), which is a # 2 (Buy) stock with a Value Score of A.
The Pennant Group is currently trading with a Forward P/E ratio of 14.49 while its PEG ratio sits at 1.11. Both of the company's metrics compare favorably to its industry's average P/E of 17.86 and average PEG ratio of 2.16.
PNTG's price-to-earnings ratio has been as high as 21.75 and as low as 12.06, with a median of 15.81, while its PEG ratio has been as high as 1.67 and as low as 0.93, with a median of 1.22, all within the past year.
The Pennant Group also has a P/B ratio of 2.54 compared to its industry's price-to-book ratio of 2.66. Over the past year, its P/B ratio has been as high as 3.68, as low as 2.23, with a median of 2.72.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Encompass Health and The Pennant Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EHC and PNTG feels like a great value stock at the moment.
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Encompass Health Corporation (EHC) : Free Stock Analysis Report
The Pennant Group, Inc. (PNTG) : Free Stock Analysis Report
